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21 Aug 2019

fight unemployment and close a recessionary gap the fed is

A. increases employment, which increase real GDP

B. stimulates a ggregate supply by lowering the federal funds rate which increase potential GDP

C. increas bank reserves, which banks use to make new loans to businesses which increase aggregate

D.stimulates aggregate demand by lowering the federal funds rate, which increase the quantity

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Related questions

1. In the long run, when prices are perfectly flexible:

a. aggregate supply is vertical and a market economy is self-correcting.

b. a market economy cannot self-correct.

c. government will be required to set prices to maintain equilibrium.

d. changes in aggregate demand cause equilibrium real GDP to change.

 

2. An increase in household wealth when the SRAS curve is upward sloping:

a. leads to an increase in the price level but has no impact on real GDP

b. has no impact on the price level but leads to an increase in real GDP

c. leads to an increase in both the price level and real GDP

d. has no impact on the price level or real GDP

 

3. In the long run, continued increases in aggregate demand not matched by similar increases in aggregate supply will cause:

a. an increase in the full-employment level of real GDP

b. a recessionary gap

c. a decrease in the price level

d. an increase in the price level

 

4. The vertical long-run aggregate supply curve implies that:

a. changes in aggregate demand will not affect the price level

b. the short-run aggregate supply curve is also vertical

c. natural or full-employment real GDP does not depend on the price level, in the long run

d. natural or full-employment real GDP is the same as the equilibrium real GDP in the short run

 

5. A rightward shift of the long-run aggregate supply curve illustrates:

a. economic growth

b. a recessionary gap

c. an inflationary gap

d. a decrease in natural real GDP

 

6. When the economy is in a recessionary gap

a. there is a surplus of labor

b. there is a shortage of labor

c. it is producing a real GDP level that is greater than natural real GDP

d. the unemployment rate is less than the natural unemployment rate

 

7. If the actual unemployment rate is less than the natural unemployment rate:

a. a recessionary gap exists and wages are likely to rise

b. an inflationary gap exists and wages are likely to rise

c. a recessionary gap exists and wages are likely to fall

d. an inflationary gap exists and wages are likely to fall

 

8. An economy in long-run equilibrium is producing:

a. a level of real GDP that is greater than its natural real GDP

b. where both the price level and real output are maximized

c. a level of real GDP equal to its natural real GDP

d. in the vertical range of aggregate demand.

 

The steps in the transmission of monetary policy are: 

(i) Increase in government expenditures by the government which subsequently increases the aggregate demand.

(ii) Increase in money supply by the government that decreases the interest rate and lead to an increase in the aggregate demand.

(iii) Increase in government expenditures by the Federal Reserve leading to an increase in the aggregate demand.

(iv) Increase in the budget deficit by the government, which increases the money supply leading to an increase in the aggregate supply.

(v) A decrease in the federal funds rate by the Federal Reserve which lowers the real interest rate and subsequently increases the aggregate demand.

 

31) A recessionary gap is the amount by which A) potential GDP exceeds real GDP. B) demand will increase to achieve full employment at a given price level. the supply curve must increase to achieve full employment at a given price level. D) real GDP exceeds potential GDP. E) the price level must adjust to achieve full employment.

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